NORTH DAKOTA HEALTH INSURANCE STUDY STATE PLANNING GRANT INITIATIVE

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1 NORTH DAKOTA HEALTH INSURANCE STUDY STATE PLANNING GRANT INITIATIVE INTERIM REPORT for YEAR TWO Funded through a HRSA State Planning Grant SUBMITTED TO THE US SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES September 30, 2005 Additional information may be obtained from: John R. Baird, M.D. State Medical Officer North Dakota Department of Health 600 East Boulevard Ave - Dept 301 Bismarck, ND (701) Fax: (701) jbaird@state.nd.us

2 TABLE OF CONTENTS Executive Summary 3 Section 1. Uninsured Individuals and Families 5 Section 2. Employer-based Coverage 14 Section 3. Health Care Marketplace 19 Section 4. Options for Expanding Coverage 25 Section 5. Consensus Building Strategies 31 Section 6. Lessons Learned and Recommendations to States 33 Section 7. Recommendations to the Federal Government 33 Appendices Appendix I. North Dakota Baseline Information 34 Appendix II. Links to Research Findings and Methodologies 35 Appendix III. SPG Summary of Policy Options 36 References North Dakota HRSA State Planning Grant Interim Report for Year Two 2

3 EXECUTIVE SUMMARY North Dakota has historically been concerned about its citizens access to affordable health care. In 1992, North Dakota was awarded a Robert Wood Johnson Foundation State Initiatives Project to examine its uninsured population and develop reform options to extend health insurance coverage. In the 1994 study an uninsured rate of 9.9% was found. The efforts of the North Dakota Health Task Force led to the enactment of House Bill 1050 during the 1995 North Dakota Legislative Session. Many of the components of HB 1050 were incorporated by other states. In an effort to continue its commitment to expanding health insurance coverage, the North Dakota Department of Health was awarded the State Planning Grant (SPG) project in 2003, a project supported by the U.S. Department of Health and Human Services, Health Services and Resources Administration. The SPG provided funding to conduct state-based research on the uninsured and also technical assistance to assist North Dakota policy makers in identifying options to expand health insurance coverage. An uninsured rate of 8.2% was found in the current study. During this past year a second year of SPG funding was used to continue study and policy development. Clearly, North Dakota is a model state for enacting incremental health insurance reforms that have contributed to it having an 8.2% uninsured rate, almost half of the rate of the uninsured in the U.S. Yet, North Dakota strives for all of its citizens to have access to affordable health care. During the past two years, the Governor s Health Insurance Advisory Committee (Committee) deliberated about what options other states have developed to extend coverage. In addition, the Committee reviewed the state-based research conducted by the University of North Dakota School of Medicine and Health Sciences, Center for Rural Health. Research findings have assisted the Committee in identifying populations to target for health insurance coverage expansion. A significant finding from the North Dakota Household Survey was that almost 32% of North Dakota s Native Americans are uninsured almost five times the percentage of White North Dakotans. Because of health disparities among Native Americans, it is critical to determine if there are opportunities to leverage federal programs to increase the percentage of insured Native Americans. Another population lacking coverage is children (8.1%). The Committee is exploring how to improve outreach efforts to parents whose children are eligible for public programs. Young adults, ages 18 24, also have a high percentage of uninsured (15.9%). In addition, almost ¾ of the uninsured adults are employed and a majority work in firms with 10 or fewer employees. Based on this finding, the Committee is exploring options to assist small employers obtain access to health insurance pools. An unexpected finding was that there was little difference in the percentage of uninsured when comparing three North Dakota regions: urban, large rural, and small rural. The second year of this project was spent largely on examining policy options and informing legislators and the public about the uninsured and possibilities for coverage. Legislation was passed during the 2005 session to exclude high-deductible health plans from mental health and substance abuse mandates in order to meet federal requirements for tax qualification of health savings accounts. A summit meeting is being planned for October 2005 to examine community approaches to health care coverage. This meeting will be facilitated by Communities Joined in 2005 North Dakota HRSA State Planning Grant Interim Report for Year Two 3

4 Action. During the next year of funding we hope to take a closer look at health insurance coverage among Native Americans and develop policy options to increase coverage and access to care for this population. Ultimately, these efforts are anticipated to further extend access to affordable health care for all residents of North Dakota North Dakota HRSA State Planning Grant Interim Report for Year Two 4

5 SECTION 1. SUMMARY OF FINDINGS: UNINSURED INDIVIDUALS AND FAMILIES QUANTITATIVE RESEARCH North Dakota Household Survey The North Dakota Household Survey (NDHS) is an instrument developed to collect information about the uninsured in North Dakota. The NDHS survey was developed to determine if national estimates accurately depict the uninsured rate in North Dakota and provide specific data at the state level. The survey was adapted from the SHADAC Coordinated State Coverage Survey (CSCS) instrument. The information collected in the survey will assist the North Dakota Department of Health and the Governor s Health Insurance Advisory Committee to design policies to assist citizens in obtaining affordable health care coverage. The University of North Dakota Social Science Research Institute (SSRI) conducted the survey between February 9 and April 7, There were 3,199 respondents to the survey with a response rate of 61.9%. Overall, 8.2% of North Dakota residents were uninsured at the time of the North Dakota Household Survey. The actual number of uninsured North Dakotans (51,920) is similar to the population of Bismarck. In comparison, the 2002 Behavioral Risk Factor Surveillance System (BRFSS) administered by the Centers for Disease Control and Prevention (CDC) indicated that 9.3% of North Dakotans were without health insurance. The 2002 Current Population Survey (CPS) indicated that 9.6% of North Dakotans were without health insurance. For telephone interviewing, we employed a list-assisted random digit dialing (RDD) frame for general population screening. The RDD frame was comprised of a list of all potential telephone numbers in working telephone banks in North Dakota. The state was divided into three sampling regions. The three regions separated by population: urban group (cities with a population of 16,718 or greater); a large rural group (cities with a population of 5,000 to 16,717); small rural group (towns with a population less than 5,000). Geographic Location NDHS data showed individuals residing within different regions of the state experience varying uninsured percentages. Small rural regions had a higher uninsured percentage (9.1%) when compared with urban (7.7%) and large rural (7.4%) regions. Income The NDHS data indicated that the percentage of uninsured increased as income decreased. When isolating adults between the ages of 18 and 64, more than 70% of those lacking health insurance made less than 200% of the federal poverty level. Of those that were insured, only 25.2% resided in households that reported an income of less than 200% of the federal poverty level. Nearly ¾ of uninsured North Dakotans were self employed or employed by someone. More than 61% of those employed worked 40 or more hours per week. Sixty-nine percent of insured North Dakotans receive health insurance through their employer. Nearly 15% of working uninsured North Dakotans had more than one job and more than 60% worked 40 or more hours a week. Eighty-four percent of the working uninsured reported that they had a permanent job compared to ten percent indicating their position was temporary and six percent 2005 North Dakota HRSA State Planning Grant Interim Report for Year Two 5

6 indicating seasonal. Employees working at firms with 100 or fewer employees represented ¾ of the working uninsured. Further analysis showed that nearly half of all working uninsured were employed by a firm with ten or fewer employees. Age The overall percentage of uninsured North Dakotans is 8.2%. NDHS data indicates that North Dakotans between the ages of 18 and 24 have the highest uninsured percentage (15.9%) of any group. The percentage of uninsured North Dakotans aged 65 years or older is the lowest in the state at 1.3%. Nearly three-fifths of the uninsured in North Dakota are under the age of 35. Children under the age of 18 have an uninsured percentage of 8.1% but represent 21.9% of the uninsured. Young adults between the ages of 18 and 24 represent less than 10% of the population in North Dakota, yet represent 19.3% of the uninsured. Children living in urban areas (34.8%) are nearly twice as likely to be uninsured than children living in small rural areas (18.8%). Children residing in urban areas are nearly six and one-half times more likely to be uninsured than children residing in large rural areas (5.3%). NDHS data indicates that the percent of children (0-17) and young adults (18-24) in urban areas represent 56.5% of the uninsured. This is in comparison to 38% for large rural and 20.1% for small rural. NDHS data indicates that adults (55-64) in small rural areas represent 13.8% of the uninsured. This is in comparison to 3.2% for urban and 1.8% large rural. Gender According to NDHS data, 58.2% of the uninsured are male. The percentage of uninsured for males is 9.6%, among females 6.8%. Males are less likely to be uninsured when located in large rural areas (6.1%) when compared to urban (11.3%) and small rural (10.1%). Females are less likely to be uninsured when located in urban areas (4.3%) when compared to large rural (8.9%) and small rural (8.1%). Family Composition Regarding marital status, NDHS data indicated that married (5.1%) and widowed (4.8%) North Dakotans are less likely to be uninsured when compared to separated (24.1%), living with a partner (21.9%), divorced (17.7%) and single (16.0%). According to NDHS data, the percentage of uninsured residing in households with six or more people is 30.1%. Yet the number of North Dakota citizens residing in a household with six or more people represent 6.3% (n=39,886) of the total population. Health Status The Institute of Medicine reports that working aged (18-65) uninsured Americans report poorer health and die sooner than those who have health insurance. Children with health insurance are more likely to have negative health conditions diagnosed during wellness checkups leading to better long-term health than those without health insurance (Institute of Medicine, 2004). NDHS data showed that when separating North Dakotans by insurance status, those with insurance considered their health to be excellent, very good or good 91.1% of the time; the uninsured reported excellent, very good or good health 85.7% of the time. Respondents with health insurance were 34% more likely to indicate that their health was excellent than those who did not have health insurance. NDHS data also indicated that people without health insurance were nearly 38% more likely to describe their health as fair or poor. Uninsured Native Americans 2005 North Dakota HRSA State Planning Grant Interim Report for Year Two 6

7 were less likely to describe their health as excellent, very good or good as compared to White respondents (73.7% versus 88.1% respectively). Uninsured Native Americans (26.3%) were more than twice as likely to describe their health as fair or poor compared to whites (11.9%). Overall, NDHS data indicated that 77.3% of insured North Dakotans made a routine visit to the doctor in the past year compared to 56.9% of uninsured North Dakotans. More than one-fifth (21.6%) of uninsured North Dakotans had not made a routine visit to the doctor in more than four years. The number of insured North Dakotans not making a routine visit in more than four years was 7% Nationally, people with health insurance are more likely to have a regular health care provider monitoring their health (Institute of Medicine, 2004). O Connor, et al (1998) indicated that maintaining an ongoing relationship with a health care provider is a key to high quality care. In North Dakota, the percentage of uninsured with a regular doctor is 58.9% compared to 76.5% for those with health insurance. North Dakotans are more likely to have a regular doctor when residing in an urban region (79.9%) compared to those residing in large rural (76.3%) or small rural (73.4%). Uninsured North Dakotans residing in urban areas have a regular doctor 68.2% of the time compared to those residing in large rural (58.1%) or small rural (52.1%). NDHS data indicates that uninsured whites 64.5% are more likely to have a regular doctor than uninsured Native Americans (41.8%). Insured Native Americans (58.2%) are nearly one-third less likely to have a regular health care provider than insured whites (86.6%). Uninsured North Dakotans were less likely to have a regular place to obtain health care when residing in urban (30.5%) areas when compared to small rural (23.6%) and large rural (19.2%) areas. Employment Status NDHS data showed the majority of both uninsured (71.7%) and insured (82.3%) adults above the age of 17 were employed at the time of the survey. The unemployed were more than three times likely to be uninsured (13.0%) than insured (4.1%). Self-employed (22.5%) respondents were nearly twice as likely to be uninsured than those employed by someone else (12.6%). Retired North Dakotans are twenty-six and one-half times more likely to be uninsured when residing in small rural areas (10.6%) than those residing in urban (0.4%) areas and nearly nine times more likely to be uninsured when residing in large rural (1.2%) areas. Females indicating they were retired and residing in rural areas are nearly twice as likely to be uninsured (13.5%) than retired males (7.7%) residing in the same region. In addition, retired females in small rural areas are nearly seven times more likely to be uninsured than retired females residing in large rural areas. Self-employed respondents from urban (16.7%) regions were slightly more likely to be uninsured when compared to those in large rural (13.8%) or small rural (14.0%). There is a higher percentage of working uninsured employed by firms with one (21.3%) person or two to ten (10.6%) people when compared to firms with 11 or more people. North Dakotans employed by firms with more than 500 employees had the highest prevalence of health insurance. A person working at a firm with only one employee was more than five and one-half times more likely to be uninsured than a person employed by a firm with more than 500 employees (3.8%). Employees indicating they were employed on a temporary (21.6%) basis were nearly three times as likely to be uninsured than an employee with permanent (7.6%) employment. Availability of Private Coverage According to NDHS data, 77.3% of the working uninsured was employed by a firm that does not offer health insurance. In addition, the working uninsured, (16.9%) are nearly three times less 2005 North Dakota HRSA State Planning Grant Interim Report for Year Two 7

8 likely to have access to health insurance through a spouse than the working insured (49.7%). Data show that 73.7% of the working uninsured are employed by a firm with 10 persons or less. Of the uninsured eligible for health coverage through their employer, approximately 55% reported cost as the primary reason for not enrolling in the insurance. As the table below indicates, the number of hours worked (16.3%) and time employed (17.9%) also served as barriers to obtaining health insurance for the working uninsured. Health Insurance Coverage NDHS data indicates that 16% of North Dakotans are enrolled in Medicare while 6.8% are enrolled in Medicaid. Nearly three-quarters of North Dakotans indicated that they would enroll in a public health insurance program if they were eligible while 59% indicated that, if eligible, they would enroll in a Medicaid public program. Race/Ethnicity The Native American (31.7%) population and North Dakotans indicating more than one race (11.5%) had the highest percentage of uninsured in the state. Whites (6.9%) and African Americans (1.6%) had the lowest percentage of uninsured. Native American children (27.7%) were four and one-half times more likely to be uninsured than white children (6.1%). Native American adults between the ages of 35 and 44 have a 50% un-insurance rate. Other NDHS data indicates that North Dakotans with health insurance (52.1%) are nearly three times as likely to possess dental insurance as those who are uninsured (17.6%). Summary of North Dakota Household Survey findings Demographic Factors Gender-Males were significantly more likely than females to be uninsured. Age-North Dakotans age were significantly more likely to be uninsured than those between the ages of 25 and 54. Race-Native Americans were significantly more likely to be uninsured when compared to Caucasians and other races. Enabling Factors Education Level-North Dakota adults who had not earned a high school diploma were significantly more likely to be uninsured when compared to those with a college degree. Employment Status-Self employed North Dakotans were significantly more likely to be without health insurance than those who were employed by someone, those who were not employed, or those who were unemployed. Household Income-North Dakotans indicating they resided in a household that earned less than 200% of the federal poverty level were significantly more likely to be uninsured when compared to those residing in a household at or above 200% of the federal poverty level North Dakota HRSA State Planning Grant Interim Report for Year Two 8

9 Behavioral Factors Visit to a health care provider in the past year-north Dakota residents reporting they had not visited a health care provider in the past year were significantly more likely to be uninsured than those who had visited a health care provider in the past year. Regular Health Care Provider-North Dakotans reporting they did not have a regular health care provider were significantly more likely to be uninsured than those who did have a regular health care provider. Self-reported Health Status-Those North Dakotans reporting a health status of very good, good, or fair were significantly more likely to be uninsured than those who reported a health status of excellent. Geographic Factor Rurality-North Dakotans residing in rural areas were significantly more likely to be uninsured when compared to those residing in urban areas. Population Groupings Targeted for Expansion Coverage From research to this point several groups have been identified as needing consideration for increased coverage: Children (0-17 years old), who have the highest number of uninsured in an age group (11,312 or 8.1%) Young adults (18-24 years old), who have the highest percentage of uninsured in an age group (15.9% or 9,963) Self-employed and small employers. In uninsured adults, aged 18 to 64, 72% (39,289) have a job. Half of those are in firms of 1 to 10 employees. Only 5.2% of firms with 10 or fewer employees offered health insurance. In firms where uninsured work only 24% offer insurance compared to all firms where 74% offer insurance. Low-income families. In adults aged % (7,462) have income < 100% FPL, and 51% (17,990) have income % FPL. Native Americans. 31.7% of those identified as Native American are uninsured (8,964). There are also another 1,020 identified as more than one race, which includes a number of Native Americans. QUALITATIVE RESEARCH Focus Groups with North Dakota residents A total of 83 individuals participated in eight focus groups held across North Dakota beginning in January Four focus groups were conducted assessing North Dakota residents experiences obtaining health insurance. The remaining four focus groups were conducted with North Dakota employers and examined the status of current health insurance provisions and likely changes for the future. Four additional focus groups will be conducted during September and October 2004 with uninsured North Dakota residents North Dakota HRSA State Planning Grant Interim Report for Year Two 9

10 Approximately 1,100 North Dakota residents were randomly invited to participate in the citizen focus groups; 47 residents participated. Groups were convened in Valley City, Hettinger, Tioga, and Grand Forks, ND. Participants were paid $20 and provided a light meal. In addition to participating in the focus group, each participant completed a brief demographic survey. Twentyfive females and 22 males participated with an average age of 58. All but two were white/caucasian. Thirty-three participants were married, 14 were single. The average income of group participants was significantly higher than the statewide household average. All participants talked at length about mechanisms for increasing coverage to more people. Potential solutions that were mentioned repeatedly included; adjusting rates for healthy individuals, placing a cap on malpractice/tort reform (which ND has), adding coverage for small things, education, fair pricing, greater access to group buy-ins, individual savings plans, individualized policies to fit needs better, lower prescription prices, more competition, managed medicine, nationalized healthcare, an increase in personal responsibility for health, preventive healthcare, removal of excess paperwork by insurance companies and hospitals, researching new technologies, increasing taxes, and working harder. There was a wide range of potential solutions, none of which were espoused any more or less than any others with the exception of lowering prescription prices and individual savings plans. Besides cost, North Dakota residents take into account the deductible, type of benefits, access to care, preventive benefits and the ability to understand the policy when purchasing health insurance. A few participants stated that they didn t need it or that their employer provided it, so choice was a non-issue for them. North Dakota residents indicated that the cost of health insurance impacts them in a number of ways. Participants across several focus groups said people work longer into their retirement years for health insurance benefits as a result of high insurance costs. A number of participants stated that given increases in co-pays, the costs of health insurance plans were exceeding the benefits. Extending benefits between employments via COBRA coverage was also considered too costly. Data collected via the resident and employer focus groups so far, has yielded interesting results. Six participants of the resident focus groups reported they had no health insurance. Two participants had gone without insurance for the past 12 months, four of them had gone for three years or greater. Those without insurance indicated that cost was the primary reason they did not have coverage. Those with high deductible insurance plans were significantly affected by cost as well as evidenced by one participant who stated, I have a $5,000 deductible. I ve paid all year on the hospital bills that insurance doesn t cover I let my insurance lapse because I can t afford it. Six percent of participants indicated that they had not seen a healthcare provider for a routine checkup over the last 12 months because of the cost. Fifteen percent of participants indicated it had been three years or greater since a routine checkup. This finding is similar to the 2000 Behavioral Risk Factor Surveillance Survey (BRFSS) which found that 16 percent of North Dakota residents had not had a routine checkup in five years or longer North Dakota HRSA State Planning Grant Interim Report for Year Two 10

11 The concept of basic coverage for all participants in the resident focus groups really meant comprehensive. Participants demonstrated a range of beliefs about health insurance. Many seemed to view it in terms of an investment versus protection. Everyone displayed some degree of confusion about their health insurance. More clearly structuring and presenting plans may help them to better understand what adequate or barebones is and what their plans will and will not do. When employers were asked to describe their vision of adequate for employee only health insurance and what it might cost, participants indicated that it would provide different coverage options for employees, protect against catastrophe, and that it depended on very specific individual circumstances. Employers talked at length about specific plans and costs related to their employees and past claim history. Most had difficulty agreeing at a group level what those plans might cost due to the variables involved. In the North Dakota SPG study, under-insurance was defined as annual out-of-pocket health care costs greater than 10% of one s annual household income. Using this methodology, approximately 8.5% of insured North Dakotans were classified as under-insured. Telephone Focus Groups with Uninsured Goals The main goals of the telephone focus groups with uninsured North Dakotans were to examine the reasons why North Dakota residents were uninsured, determine the importance of health insurance to the uninsured, assess whether uninsured families in North Dakota were getting health care and to determine what it would take for uninsured North Dakotans to get health insurance. Methodology Ninety-one uninsured North Dakota residents identified through a prior telephone survey were invited to participate in the telephone focus groups. Five individuals, two men and three women, participated in one telephone focus group that originated from Grand Forks. The participants were given 20 dollars for their contributions. This focus group began at 7:00 AM on November 18 th, 2005 and lasted for an hour. The participants were asked questions on health insurance status, their health care needs, and their ideas on potential solutions for solving the uninsurance problem. Results Regarding health insurance status, two participants reported never having it while one person had been without it for 15 years. Another participant had insurance but was speaking on behalf of his wife who did not. The fifth participant had acquired health insurance less than a month prior to the focus group. It was noted that the participants primary reason for not having insurance was cost. One participant noted: My husband and I just have never been able to afford it and we ve just never been able to find a job that has offered it. Employment related reasons included employers not offering insurance or offering those that require high deductibles; employers hiring only part North Dakota HRSA State Planning Grant Interim Report for Year Two 11

12 time, non-benefited positions; employers excluding coverage that extends to families; and employers having mandated waiting periods for coverage. Some mentioned that the costs of participating in COBRA were too high, while some thought that inability to work due to a health condition rendered individuals unable to afford coverage. One participant believed that eligibility for IHS would meet his healthcare needs. When asked how important health insurance was to the uninsured, the group resoundingly agreed that health insurance was extremely important to them. One participant commented, I think it s essential for everyone to have some health insurance coverage because nobody is rich enough to be able to afford all those medical bills, and some of them can be astronomically high and break a whole family completely. Are the uninsured getting health care? To this all participants indicated that both they and their family members had foregone some form of healthcare because of their lack of insurance. No participant had a regular medical provider. One participant expressed frustration, feeling stigmatized by his lack of insurance. He said, I have medical problems, and I don t go [to the doctor] because I can t afford them. I m asked every time if I have insurance and I don t have insurance. When asked what affordable health insurance coverage meant to them, participants felt that they could afford between $25 to $150 per month with allowances made for income, family size, and type of plan offered. Participants also indicated that low cost, high deductible insurance is not especially attractive because: a) it does not provide enough coverage for things they want covered, b) if they did use their insurance, they would have to pay both the deductible and the insurance premium, and c) they have no assets to protect, except their health. Some mentioned that it was probably cheaper to pay the hospital on a monthly basis rather than spend on insurance. Participants had different thoughts on potential methods for getting more uninsured health insurance coverage. These included sliding fee scales (both at doctor s office and for insurance), universal insurance coverage, a rich husband, and alternative insurance programs where beneficiaries pay a monthly fee for discounts on an array of healthcare services offered by network providers. Take home messages The telephone focus group had the following take home messages: Cost is the main issue. Health insurance and health care is desired by the uninsured, but unaffordable. Health care is often foregone because of a lack of insurance and high medical costs. High deductible, low cost plans are not especially attractive to low income purchasers. Employers are increasingly cutting back on their health benefits or not offering them. Participants reported that affordable plans would range from $25 - $150 a month. Solutions for health insurance offerings may include the use of income based scales. Education on purchasing and proper utilization of insurance is important. Continued efforts in outreach to make people aware of prevention and treatment services (both state funded and locally offered programs) North Dakota HRSA State Planning Grant Interim Report for Year Two 12

13 Future research activities Future research activities would include a telephone survey of employers which will focus on collecting definitive information about coverage provided and types of employers providing insurance and also identifying employment settings where the uninsured work North Dakota HRSA State Planning Grant Interim Report for Year Two 13

14 SECTION 2. SUMMARY OF FINDINGS: EMPLOYER-BASED COVERAGE QUANTITATIVE RESEARCH Employer-based Health Insurance Study Purpose To determine the number of North Dakota businesses that offer employer based health coverage to their employees, To identify factors influencing the likelihood of employer based health coverage being offered (e.g., firm size, industry type, and mean wage per employee, To examine alternative forms of employer based health coverage for North Dakota employers (e.g., Three-Share Programs), and To continue in the development and maintenance of an annual employer health coverage survey to measure trends concerning the availability of employer based coverage. Background and Relevance: Health insurance in the United States may be the most pressing issue facing health care today. According to the Kaiser Family Foundation (Rowland, 2004) approximately 43.6 million American s are without health insurance. From 2000 to 2002, the number of uninsured Americans increased by nearly 4 million or 9.8 percent. It is estimated that 61% of the uninsured are under the age of 35 and 91% of the uninsured are under the age of 55. The majority of the uninsured reside in households that earn less than 200% of the federal poverty level ($36,800 for a family of four). Eight of ten uninsured Americans reside in households with at least one member currently working. The absence of health insurance is often perceived to be a result of not working. Empirical evidence contradicts this perception as the majority of the uninsured do work. Nationally, fiftysix percent of those without health insurance reside in a home that has at least one full time employee. According to a recent report (Garrett, 2004), employee sponsored health insurance covers 2/3 of all insured Americans under the age of 65. As stated earlier, the majority of uninsured workers are from low income families. Age is another factor to consider. The 18 to 24 age group comprises 10% of all workers yet account for approximately 21% of the working uninsured. Thirty-two percent of the working uninsured is of Hispanic origin yet they comprise 12% of working adults. Firm size is also important when discussing the working uninsured. Workers employed by firms with less than ten people represent 27% of the working uninsured yet represent on 11% of the total workforce. In comparison, 66% of the workforce is employed by large firms (more than 100 employees) yet represent only 39% of the working uninsured. The North Dakota Household Survey administered in 2004 contained similar results. The number of uninsured North Dakotan s was reported 51,920 or 8.2 percent of the total population. Although this was a decrease from the number of uninsured reported in 1994 (9.2%), several 2005 North Dakota HRSA State Planning Grant Interim Report for Year Two 14

15 trends emerged. The survey discovered that the uninsured are overrepresented by males (9.6%) when compared to females (6.8%). Native Americans (31.7%) are nearly five times more likely to be uninsured than Whites (6.9%). Those North Dakotans reporting that they were married (5.1%) or widowed (4.8%) had the lowest prevalence of un-insurance when analyzing marital status. Those reporting they were separated (24.1%), living with a partner (21.9%), and single (16%) had the highest prevalence of un-insurance based on marital status. More than one out of every five (11,311) uninsured North Dakotans was below the age of 18. Young adults (18-24) have a 15.9% uninsured rate, nearly double the state rate. Fifty-eight percent of uninsured North Dakotans are below the age of 35 and ninety percent are under the age of 55. When isolating adults between the ages of 18 and 64, more than 70% of those lacking health insurance made less than 200% of the federal poverty level. Of those that were insured, only 25.2% resided in households that reported an income of less than 200% of the federal poverty level. Nearly ¾ of uninsured North Dakotans were self employed or employed by someone. More than 61% of those employed worked 40 or more hours per week. Sixty-nine percent of insured North Dakotans receive health insurance through their employer. Nearly 15% of working uninsured North Dakotans had more than one job and more than 60% worked 40 or more hours a week. Eighty-four percent of the working uninsured reported that they had a permanent job compared to ten percent indicating their position was temporary and six percent indicating seasonal. Employees working at firms with 100 or fewer employees represented ¾ of the working uninsured. Further analysis showed that nearly half of all working uninsured were employed by a firm with ten or fewer employees. As part of the current State Planning Grant, several employer focus groups were conducted in the state of North Dakota to collect qualitative data to assist in the development of an employer survey. The results of the household survey and focus groups enabled CRH researchers to customize a questionnaire that will be mailed out to North Dakota employers. The focus group findings indicated that costs were the number one consideration in determining whether or not to offer coverage. Employer size also seems to be positively correlated with whether or not insurance is offered as larger employers appear to be more likely to offer benefits. Offering health insurance was described as important in helping ensure stability, minimizing turnover costs and attracting and retaining employees. Employers who did not offer health insurance coverage indicated that cost was the number one reason they did not. All employers expressed an interest in being able to make insurance available to their employees. Several employers expressed concern about the complexity of offering insurance plans as indicated by the following quote; The only thing that concerns me is the complexity. It isn t just the rate of the plan any more; it s also the other things that go along with it, whether it is disease management, [or] a Health Savings Account. That concerns me whether your average employer is going to have staff on hand that can really even analyze that. Another participant stated Employers have got to have somebody to go to that s an expert in it (insurance planning/purchasing) because you just can t do it yourself anymore. It s tougher and tougher Overall, employers felt they could provide adequate insurance at the present costs but were experiencing significant double digit percentage increases in insurance rate premiums annually. Many participants blamed a lack of competition in the insurance industry in North Dakota as part 2005 North Dakota HRSA State Planning Grant Interim Report for Year Two 15

16 of the increase in costs, while others reported that organizations in other states with more competition in the insurance marketplace were paying much higher rates. All participants predicted significant changes in the immediate future such as employee contributions, raising deductibles, changing plan options, Benefits based more on tenure, elderly unable to retire, benefits such as vision and dental will be cut, etc. The employer focus groups reveal that ND employers are struggling to maintain current levels of coverage and are increasingly frustrated with rate increases. Benefit cuts and cost sharing with employees will increase and will accelerate with any decline in the local, state or national economy. Employers are highly motivated to hold costs down and would likely be willing participants in activities to address rising healthcare costs; at a minimum, increasing communication between insurance companies, employer organizations and the larger medical community is crucial as there as there are a large number of issues contributing to rising health insurance costs. Employers realize that many older North Dakota residents may be working solely for health insurance benefits and if left unaddressed, these issues will continue to grow, especially during difficult economic times. Hypotheses, Design and Analysis: This study will address the following research questions: What are the types of health coverage plans offered to employees through their employer (e.g., individual, family, vision)? What are the primary reasons that North Dakota employers do or do not offer health coverage to their employees What is the length of time an employee must be employed at a particular firm before health coverage benefits take effect? Compared with prior years, have employer based coverage premiums increased or decreased? If so, by how much? Compared with prior years, have the terms of employer based coverage changed? If so, in what manner? Do factors such as firm size, industry, or geographic location significantly affect an employer s ability to offer health coverage to their employees? The analytic approach will include the following components: 1) univariate and bivariate analyses of the survey data; 2) multivariate analyses to examine factors influencing the employer s ability/willingness to provide health coverage to their employees, 3) development of policy strategies. For all analyses, SPSS 12.0 (base model, advanced models and advance regression packages) will be used to run the descriptive statistics, chi-square, and logistic regressions. These analyses were selected as most of the variables in the data sets are categorical in nature. A significance level of.05 will be used. Explanatory analyses will be employed to select bivariate correlations to be computed between the predictor variables. Odds ratios, confidence intervals and p-values will be interpreted and reported North Dakota HRSA State Planning Grant Interim Report for Year Two 16

17 Pending Results: The employer survey was created through a joint effort between the current North Dakota State Planning Grant team and Job Service North Dakota (Appendix A), a state agency that reports to Governor John Hoeven. Through a collaborative process, the employer based health coverage survey has been merged into the larger Employee Benefits Survey administered to North Dakota employers annually. In order to identify employer provided benefit trends in the state, 16 local regions have been identified by the Job Service North Dakota. Phase one of the survey occurred in April 2005 with 5,304 surveys being mailed to North Dakota businesses in eight of the state regions to include Beulah-Hazen, Bismarck-Mandan, Devils Lake, Dickinson, Fargo-West Fargo, Grafton, Grand Forks, Jamestown, Minot, Rolla Rolette County, Valley City, Wahpeton and Williston. The first mailing was subsequently followed up by a second (May 11, 2005) and a third mailing (June 13, 2005) to those businesses who had yet to return a survey. There were a total of 2,660 surveys returned for a response rate of 50.2%. The original plan allowed for CRH to have completed preliminary survey analysis in time for this report. Unfortunately, Job Service North Dakota experienced personnel turnover which led to a delay in the delivery of the dataset to CRH. CRH staff has been in close contact with the Labor Market Information Director, who has been working diligently with his staff to deliver the dataset. Duane has assured the CRH that the complete dataset will be delivered no later than October 31, Once the dataset is delivered, CRH staff will analyze the information and provide a full report to this committee. Further, Job Service North Dakota has agreed to deliver this annual dataset to this committee free of charge, thus assuring the availability of this information for years to come. As with any large project, there are bumps in the road that need to be smoothed out. It is our opinion that the delays we are currently experiencing will lead to stronger working relationship with Job Service North Dakota and lead to a seamless process in future years. QUALITATIVE RESEARCH Employer Focus Groups Approximately 1,200 North Dakota employers were randomly invited to participate in focus groups held in Fargo, Grafton, Bismarck, and Grand Forks. Thirty-six individuals total attended; each was a key health insurance purchasing decision maker within their organization. The average number of employees represented by each participating organization was 590, which means that on average, participants represented larger than average sized employers within the state. Attendees were provided a light meal for their participation and completed a brief demographic survey. Participants of the employer focus groups indicated that offering health insurance was critical in helping ensure stability, minimizing turnover costs and attracting and retaining employees. Further queries about the desires of workers in this vein were not explored during the groups. Costs were the number one consideration in determining whether or not to offer coverage. Employer size also seems to be positively correlated with whether or not insurance is offered as larger employers appear to be more likely to offer benefits. Offering health insurance was described as important in helping ensure stability, minimizing turnover costs and attracting and 2005 North Dakota HRSA State Planning Grant Interim Report for Year Two 17

18 retaining employees. Employers who did not offer health insurance coverage indicated that cost was the number one reason they did not. All employers expressed an interest in being able to make insurance available to their employees. Several employers expressed concern about the complexity of offering insurance plans as indicated by the following quote; The only thing that concerns me is the complexity. It isn t just the rate of the plan any more, its also the other things that go along with it, whether it be disease management, [or] a Health Savings Account. That concerns me whether your average employer is going to have staff on hand that can really even analyze that. Another participant stated Employers have got to have somebody to go to that s an expert in it (insurance planning/purchasing) because you just can t do it yourself anymore. It s tougher and tougher Overall, employers felt they could provide adequate insurance at the present costs but were experiencing significant double digit percentage increases in insurance rate premiums annually. Many participants blamed a lack of competition in the insurance industry in North Dakota as part of the increase in costs, while others reported that organizations in other states with more competition in the insurance marketplace were paying much higher rates. All participants predicted significant changes in the immediate future such as employee contributions, raising deductibles, changing plan options, Benefits based more on tenure, elderly unable to retire, benefits such as vision and dental will be cut, etc. The employer focus groups reveal that ND employers are struggling to maintain current levels of coverage and are increasingly frustrated with rate increases. Benefit cuts and cost sharing with employees will increase and will accelerate with any decline in the local, state or national economy. Employers are highly motivated to hold costs down and would likely be willing participants in activities to address rising healthcare costs; at a minimum, increasing communication between insurance companies, employer organizations and the larger medical community is crucial as there as there are a large number of issues contributing to rising health insurance costs. Employers realize that many older North Dakota residents may be working solely for health insurance benefits and if left unaddressed, these issues will continue to grow, especially during hard economic times North Dakota HRSA State Planning Grant Interim Report for Year Two 18

19 SECTION 3. SUMMARY OF FINDINGS: HEALTH CARE MARKETPLACE CURRENT HEALTH CARE DELIVERY SYSTEM North Dakota s health care delivery system is influenced by a number of factors including being a very rural state. Over two-thirds of the counties (36 of 53) are considered frontier (having six or less people per square mile) by the federal government. The state s population from the 2000 Census is 642,200 people. From 1990 to 2000, 47 of the 53 counties lost population, including 31 counties that suffered population losses of percent and six counties losing over 20 percent of their population. There are approximately 1,380 licensed physicians practicing in North Dakota with 45 hospitals. Two of the hospitals are part of the Indian Health Service (IHS). 37 hospitals are rural and 28 are critical access hospitals. The private insurance market in North Dakota is approximately 40% employer sponsored selfinsurance plans regulated by ERISA and 60% individual, small group, and large group plans regulated by the state. In 2002 the number of companies marketing health insurance in North Dakota included 6 marketing individual insurance, 11 marketing small group insurance, and 9 marketing large group insurance, with one company, Noridian/Blue Cross Blue Shield receiving over 70% of the market share of insurance premiums in the state. Some aspects of managed care (e.g., the preferred provider organization - PPO model and the exclusive provider organization - EPO model) have developed systematically throughout the state in both urban and rural areas. The Health Maintenance Organization (HMO) model has not been able to develop a strong presence. There are two licensed HMO's in North Dakota serving approximately 14,500 people (2% of the population). Blue Cross Blue Shield of North Dakota (which provides coverage to approximately 75 percent of the private health insurance market) reports that 52% of its members are covered under a group plan and receive benefits through the PPO or EPO models. In North Dakota's Public Employee retirement System (PERS) health plan, the largest group plan in the state, 17,992 lives (about 30% of the 54,944 lives covered) are covered under an EPO arrangement. EPOs tend to have the most restrictive network coverage and lowest co-payment and co-insurance options. Most other PERS members are covered by a less restrictive model, the PPO. PERS covers state employees but has been opened to allow other public employees to be served by the system. Attempts in the legislature to open the PERS program to private sector employees and others without health insurance have been defeated. North Dakota participates in two state administered public coverage programs, Medicaid and State Children s Health Insurance Program (SCHIP). There are approximately 53,000 individuals enrolled in the Medicaid program and 2,400 children in the SCHIP program, know in North Dakota as Healthy Steps. Healthy Steps covers children 18 years of age and younger whose net family income is greater than Medicaid levels but less than 140% of the federal poverty level (FPL). Medicaid and Healthy Steps are managed by the Department of Human Services. North Dakota provides a basic set of services to categorically eligible recipients of the program as well as 2005 North Dakota HRSA State Planning Grant Interim Report for Year Two 19